RAYO VS CFI

ISSUE:  Whether respondent National Power Corporation performs a governmental function with respect to the management and operation of the Angat Dam; and Whether the power of respondent National Power Corporation to sue and be sued under its organic charter 

FACTS:  On October 26, 1978, typhoon “Kading” struck Bulacan. Due to this, the National Power Corporation (NPC), through its plant superintendent Benjamin Chavez, simultaneously opened 3 floodgates of Angat Dam.The opening of the floodgates caused several towns to be inundated (the town of Norzagaray was the most affected one). It resulted to a hundred deaths and damage to properties that were worth over a million pesos. Petitioners (victims) filed a complaint for damages against NPC, including plant superintendent Benjamin Chavez. Respondent filed counterclaims and put up a special and affirmative defense that “in the operation of the Angat Dam,” it is “performing a purely governmental function”, hence it “cannot be sued without the express consent of the State.”Petitioners oppose the defense, contending that the NPC is not performing governmental but merely proprietary functions and that under its own organic act, Section 3 (d) of Republic Act No. 6395, it can sue and be sued in any court. CFI dropped the NPC from the complaint and left Chavez as the sole party-defendant. 

DECISION:  Upon a motion for reconsideration, the CFI ruled that petitioners’ reliance on Sec. 3 of RA 6395 is not tenable since the same refer to such matters that are only within the scope of the other corporate powers of said defendant and not matters of tort as in the instant cases. Being an agency performing a purely governmental function in the operation of the Angat Dam, said defendant was not given any right to commit wrongs upon individuals. To sue said defendant for tort may require the express consent of the State. PETITION DISMISSED. 

​RATIO DECIDENDI:  SC reversed the CFI decision and GRANTED petitioners to reinstate their complaint against the NPC.It is sufficient to say that the government has organized a private corporation, put money in it and has allowed it to sue and be sued in any court under its charter. (R.A. No. 6395). As a government owned and controlled corporation, it has a personality of its own, distinct and separate from that of the Government. Moreover, the charter provision that the NPC can “sue and be sued in any court” is without qualification on the cause of action and accordingly it can include a tort claim such as the one instituted by the petitioners.